By Rick Dunham, Founder+CEO
I’ve got this deep-seated fear. That fear is that too many nonprofit boards are doing more harm than good.
Sure, I believe that the vast majority of those who serve on nonprofit boards are well-meaning. But they are often serving in a vital role without a clear understanding of the issues that impact the effectiveness of a nonprofit, especially when it comes to fundraising.
Think about it. For-profit companies go to great lengths to attract members to their boards that understand the business and can add insight and experience in that sector. But for the most part, non-profit boards are made up of people who live in a different world and whose experience usually doesn’t inform the business of a nonprofit.
I know, I know. There are some stellar nonprofit boards. And they deserve a standing ovation for the leadership they provide.
But for too many organizations, that just isn’t the case. In too many instances the boards are forcing directions, adopting policies and overriding executive leadership based on ignorance, naiveté, or ego. And the consequences are devastating.
For example, I work with one international organization whose board adopted a policy a few years back that has cost them the support of major donors who have provided substantial support over the years.
This organization does its work overseas. But it also has substantial domestic programs to educate, advocate and engage key publics. About 60% of the money goes overseas, about 25% to domestic efforts and the remainder is administration and fundraising.
The board, in its wisdom, decided – and actually adopted a policy – that the organization would produce an annual report that would show in effect, that the money going overseas is the only money applied to its “work.” The policy dictated that all other expense would be shown as overhead.
Oh my. There are so many things I could say here, but I will hold my tongue.
What I will say is that what this board has done is force the organization to be dishonest in its communication with the public and its donors. Their work is far more extensive than what is sent for the work overseas, yet they are now misleading donors into thinking that the extent of their “legitimate” work is beyond their borders.
Shame on them.
This move has cost key funding as major donors now believe the organization is incompetent and not enough of their support is going to support the mission. The board has damaged the very organization they are supposed to uphold and protect. They should be so ashamed.
I wish this was an isolated case, but my experience is that the incompetency, misguided policies, and anemic financial support emanating from non-profit boards is the rule, not the exception. This includes…
• Lack of financial support for the very charity they govern. I just don’t get this. If you serve as a member of a board, that responsibility includes the generous financial support of the organization. If you’re not providing financial support your heart isn’t really into the work, so do the organization a favor and resign. Seriously. Have the character to hand in your resignation.
•Poor stewardship. Most boards think stewardship is managing the expenses of the organization, but that’s just not true. Stewardship is defined as the effective investment of available funds to maximize revenue, not cutting expense. Anyone can cut expenses. That’s the easy way out. If your charity is struggling financially, don’t look at where you can cut expenses, look at how you can invest what you have to grow revenues.
•Management overreach. Way too many boards overstep their bounds and micro-manage the operations of the charity they are supposed to be governing. Unless you are on the board of a very tiny charity or start-up, your job is not to run the organization. Your job is to govern. Approve the budget, pass the appropriate policies, provide counsel and guidance, but keep your nose out of the running of the organization. That’s not your job.
•A personal power trip. There are board members who think that because they are on the board they have the power to personally direct things in the organization. Even if you are the Chairperson, you don’t. The power of the board resides in the corporate body of the board, not the individuals. So get off your power trip. And if you serve on the board where someone, including the Chair, is overstepping his or her authority, you and the rest of the board have the responsibility to stop it.
•Lack of engagement. The number of board members who add no value to the organization they govern is stunning. They show up at board meetings unprepared and contribute little, if anything, to debate, conversation or decisions the board needs to make. If that’s you, have the integrity to step down. Please.
The bottom line is that the first rule of a board is to do no harm. So take a hard look at the way you, as a board, are affecting the organization. Please be honest. And if there are ways in which you are hurting the organization, have the courage to change course. It’s hard enough for a nonprofit to succeed without the drag of poor governance.
More Insights from Dunham+Company: The Epidemic of Abuse
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